The next big market mover, according to Wall St.
Some die-hard Wall Street companies say investors want to briefly stop sweating about whether President Trump or former Vice President Joe Biden will win the White House in November and leave their portfolios for a month of positive news about the drug war on COVID-19 want to keep ready.
Because this is the true market catalyst for 2021, say the White Glove investment banks.
"We believe the recovery is intact and believe the November Phase 3 vaccine data could be a catalyst for the market to prevent reopening in 2021," Morgan Stanley strategist Adam Virgadamo wrote in a new Communication to customers. Virgadamo points to research by Morgan Stanley's biotech team calling for positive efficacy data from three leading vaccine candidates in November as the main reason for his optimistic stance.
According to the New York Times, there are currently 11 COVID-19 vaccines in Phase 3 trials worldwide. Moderna and Pfizer are generally among the US companies most advanced in developing a COVID-19 vaccine.
Pfizer announced in September that it will file for a regulatory review of its two-shot coronavirus vaccine in late October. Moderna CEO Stéphane Bancel said at a Financial Times conference earlier this month that November 25 will be the earliest that emergency clearance will be obtained for its two-shot vaccine candidate.
From these vaccine approval points, strategists like Virgadamo believe that an aggressive spike in the spread of COVID-19 vaccines will help reopen economies around the world quickly and further stimulate the stock market beyond November.
Empty collection vials are being held for the NIH-funded Moderna COVID-19 vaccine in phase three, waiting to be processed in the sample processing laboratory at the University of Miami's Miller School of Medicine in Miami, Florida on Wednesday September 2, 2020 be in Miami. (AP Photo / Taimy Alvarez)
Virgadamo, the US government under Operation Warp Speed, already has 100 million vaccine doses from Pfizer (option for another 500 million), 100 million from Moderna (option for another 400 million) and 100 million from Astrazeneca (option for another 300 million ), 100 million from Sanofi (option for another 500 million) and 100 million Novavax.
To prepare for the vaccine-fueled economic boom in 2021, Morgan Stanley recommends 40 stocks it believes are currently "mispriced". The list is a who's who of companies hit by falling demand from COVID-19 this year. Some well-known names on the list that have caught the attention of Yahoo Finance are Coca-Cola, Bloomin 'Brands, Booking Holdings, Capri Holdings, Darden Restaurants, Delta Airlines, ExxonMobil, General Motors, Hilton, JetBlue, Marriott, and Urban Outfitters.
Along with rival Goldman Sachs, Morgan Stanley is suggesting that investors should be prepared for cheap vaccine news soon in the coming weeks.
"The vaccine is a more important factor than the election result for the path of stocks," said Goldman Sachs strategist David Kostin. Unlike Morgan Stanley, Goldman's Kostin is also interested in how COVID-19 therapeutics can help boost the global economy and act as a catalyst for markets.
Says Kostin, "Aside from the vaccine, therapeutic antibodies from Eli Lilly and Regeneron have shown hospital / emergency room benefit in early studies and offer a potential bridge to wider vaccine availability, a dynamic that investors may underestimate."
Brian Sozzi is the editor-in-chief and co-host of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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